A friend of mine, (I’ll call him Mark), is the Vice-President of Marketing for a large national retailer. Sales are down and his boss is holding him to account and demanding action. YESTERDAY!
The only course of action he has, given the do it yesterday ultimatum, is to throw more money at promotion—money he doesn’t have in his budget. But, finding the money isn’t his primary worry.What does concern him is that he knows from experience that spending more on advertising and promotion is unlikely to have the desired impact on sales.
Mark had foreseen this decline in sales months ago.
Comments on Facebook and Twitter were indicating that a growing number of customers were dissatisfied with various aspects of the marketing mix. He also knew that for every one that commented there were many more that didn’t. Customers were critical:
“Your merchandise has lost its edge”
“I am not happy about the service I received from your salesperson”
“Your prices are too high”
“Your stores feel dated”.
Mark’s discussions with customers and sales associates surfaced similar concerns. To make matters worse, he had been WOWED! by a competitor’s newly-renovated store.
Mark tried to engage the CEO and his peers (V.P.s of Merchandising, Operations, H.R and Finance) in a discussion about what he was learning from social media and his store visits. The CEO brushed him off. “We know what we are doing. Our job is to serve the many, not the few that complain.” His executive team peers, in full turf protection mode, also quickly shut down his efforts.
Their customers were talking to them but he couldn’t get anyone to listen.
Now that sales are down Mark is being held to account. He knows the areas the team needs to look at. But, Mark faces two problems. Firstly, he knows that it cannot be done yesterday. And secondly, what needs to be done extends beyond his purview of responsibility.
The executive team lacks situational awareness and understanding
Mark believes that the brand’s value proposition is losing its attractiveness for too many of its customers and this has manifested in declining sales. Mark expressed his concerns:
“I have lots of anecdotal evidence that we are missing the sweet spot for our customers. The problem is I have no real idea of what the sweet spot actually looks like. How can we fix the sales decline if we don’t know what’s really at the heart of our problem? Is it our merchandise, our service, our stores, all three? Are enhancements made by competitors negatively affecting customer’s perceptions of our brand? Are these enhancements redefining the competitive game? We must find ways to dramatically improve our situational awareness and understanding if we are to turn this situation around. Only then will we be able to discern the right opportunity for improving our value proposition.”
Mark is, of course, right. This may seem obvious to many but is not understood by some. To create strategy you must first discern opportunity.
It’s simply not possible to discern the opportunity that’s at the heart of a valuable competitive strategy unless you have the necessary situational awareness and understanding. This requires a thorough comprehension of:
- The nature of the market and factors that may influence its growth
- The activities and actions of competitors
- The goals or problems that customers are seeking to satisfy or resolve.
It’s through this comprehension that it’s possible to discern opportunity.
Matching opportunity in the marketplace to your own unique capability is the cornerstone of competitive strategy. Strategy is about creating a unique and compelling value proposition in the mind of the customer. It’s this that gives you true competitive advantage in the marketplace. Until that is figured out, all of the promotion in the world isn’t going to solve the problem. Good luck Mark!
Great article and it is legitimate problem everyone will probably face sometime in their career. I sympathize with Mark, when “executive teams lack situational awareness and understanding” there is only a limited amount of actions a VP can take.
The only thing I can suggest is to compare the sales decline of the retail store to the Canadian retail store mom http://www.tradingeconomics.com/canada/retail-sales. If the stores sales decline is higher than the national average then it might give Mark some leverage to implement changes.
I wish Mark the best of luck and I would recommend that you (@Ashleykonson)do a follow up when you get the chance.
Time for a wake-up call for your friend (and presumably client). Mark (not his real name) is VP – Marketing. His job is to understand the customer’s needs, to have conducted market research on both the needs and how well the retail chain is not only meeting those needs but has also communicated those needs, and where the points of intended competitive differentiation are failing.
Mark, as it stands, has nothing to communicate except presumably product and price promotions. That’s sad! You are right, no amount of money will fix the problem – as defined.
His job as marketing VP is to communicate not only the products and prices (presumably in weekly ads, newspaper inserts and catalogues) but also the brand offer and values of the organisation. Is he actually doing that? I’m taking a shot (based upon my own experience with mass retailers in Australia) to hypothesise that both Mark and the company do not understand marketing. You were right in another (earlier) post to criticise companies who see marketing as (product) promotion and advertising only.
Your friend and his company must (presumably) have a wealth of sales data (by category and store), mystery shopper surveys, sales per square foot, store demographics and store designs, retail survey data from the census, competitors in the area, staffing levels per store, etc. That’s more than enough data to start tackling the problem of identifying what is happening in the stores and in the marketplace.
Of course, I’d be happy to help (chuckle) to improve the performance of the retailer. We could even work together on this!